Third Party Beneficiary. John Palace and Leonard Harlan, who headed Palace-Harla

Question

Third Party Beneficiary. John Palace and Leonard Harlan, who headed Palace-Harlan, Inc., an investment firm, entered into an agreement with the federal govern­ment to buy Empire Federal Savings and Loan. Under the agreement, Palace-Harlan was to invest a nominal amount in the bank and arrange for others to invest much more, in exchange for, among other things, a promise that for two years, Empire would not be subject to certain restrictions in federal regulations. The govern­ment’s enforcement of other regulations against Empire led to its going out of business. Palace-Harlan, and the other investors filed a suit in the U.S. Court of Federal Claims against the government, alleging breach of contract. The government filed a mo­tion to dismiss all of the plaintiffs except Palace-Harlan, on the ground that the oth­ers did not sign the contract between the government and Palace-Harlan. Is the government correct? Should the court dismiss the claims brought by the other inves­tors? Why or why not?  

Explanation / Answer

In this case the government's claim must be dismissed because as per the agreement the government itself has agreed that Palace-Harlan could get others to invest int he project and the government has no right ot deny their right. So the government is not correct int his context and hence the court cannot dismiss the claims of other investors.

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